The latest weekly decline resulted primarily from falling Delayed Bid Date activity and a smaller decline in Abandoned project activity.
On Hold activity in the latest week increased by less than 1%. Over the latest month, Delayed Bid, On Hold, and Abandoned activity have changed by -0.4%, 10%, and -7%, respectively, sending the Index higher by only 20 basis points (0.2%).
While the PSI continues to trend within a narrow range of between 120 and 130, we are encouraged by the recent fact that abandonment activity has declined to near-year-low levels in recent weeks despite this improvement being offset by activity related to projects put on hold.
| Delay Bid Date | On Hold | Abandoned |
|---|---|---|
(Week-on-week changes of less than 0.25% are indicated as unchanged)
Public and private projects often exhibit distinct stress trends due to their varied financing sources. Six months after the Federal Reserve initiated interest rate hikes in early 2022, conditions for private sector projects deteriorated noticeably, as evidenced by a significant increase in abandonments beginning in mid to late 2022.
Public projects fared far better in 2022 and early 2023, thanks partly to a wave of federal stimulus spending legislation. The decline in abandoned projects in recent weeks has been observed across both sectors. Since reaching their respective February’s highs the level of abandonments has fallen between 20 and 30-percent in each sector.
However, because of the generally more difficult conditions being experienced in the private sector, current private abandonment activity remains 36-percent above 2021’s baseline level. In comparison, the latest public sector activity reading was only 7 percent above its 2021 baseline.
The Project Stress Index (PSI) composite represents an equal-weight measure of the seasonally adjusted level of pre-construction projects that have experienced a delayed bid date, have been placed on hold, or have been abandoned in the last 30 days. The PSI monitors nonresidential and multifamily projects in their preconstruction phases only and thus excludes any single-family home construction. Each component has been seasonally adjusted and then indexed against its 2021 average weekly reading. The independent tracking of each status type gives unique insights into the timing, direction, and amplitude of market changes.
Additional information about the PSI, including detailed data about the individual readings for delayed, on hold, and abandoned projects can be found here.